NYSE Reporting Firms: Housing And Mortgage Crisis Caught Up With Profits In 3Q 07 By: Marcelo Vieira. Middle Market Report By: Bryan Gross

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1 Research REPORT D E C E M B E R 2 8, 2 7 NYSE Reporting Firms: Housing And Mortgage Crisis Caught Up With Profits In 3Q 7 By: Marcelo Vieira Middle Market Report By: Bryan Gross Volume I I No. 12 Securities Industry Employment Update By: Paul Rainy New York n Washington n London n Hong Kong

2 TABLE OF CONTENTS 4... NYSE-REPORTING FIRMS: HOUSING AND MORTGAGE CRISIS CAUGHT UP WITH PROFITS IN 3Q 7, by Marcelo Vieira. Pre-tax profits of NYSE-reporting firms fell from a gain of $4.2 billion in 2Q 7 to a loss of $3.8 billion in 3Q 7, bringing year-to-date profits to a total of $5.1 billion, nearly 6 percent below that in the same year-earlier period. Lower profits were driven by trading losses and weak underwriting revenues. Net revenues (total revenues minus interest expense) totaled $2.1 billion in the third quarter, 42.1 percent and 33.6 percent below levels in 2Q 7 and 3Q 6, respectively Middle Market Report, by Bryan Gross. Middle-market firm-led issuance increased through the first three quarters of 27, the result of strong growth in the agency, municipal, and securitization sectors earlier in the year. Tighter financing conditions in the corporate markets slowed issuance, while equity underwriting and mergers and acquisitions volume moved higher Securities Industry Employment Update, by Paul Rainy. The Bureau of Labor Statistics estimates that national securities industry employment decreased by 1, jobs in September, down.1 percent from August s level. During the same period, securities industry employment in New York State decreased by.6 percent, or 1,2 jobs, and in New York City was down 1.5 percent, or 3, jobs. SIFMA Research Reports, Vol. II, No. 12 (December 28, 27) 3

3 NYSE-REPORTING FIRMS: HOUSING AND MORTGAGE CRISIS CAUGHT UP WITH PROFITS IN 3Q 7 As expected, the most severe housing turmoil in decades helped push third-quarter profits of NYSE-reporting firms to the lowest quarterly levels on record. 1 The subprime crisis and its disruption of the structured products and mortgage-backed securities markets directly and credit markets generally has so far resulted in more than $5 billion in writedowns by commercial and investment banks globally. As a result of writedowns and driven by trading losses and weak underwriting revenues, NYSE-reporting firms pre-tax profits fell from a gain of $4.2 billion in 2Q 7 to a loss of $3.8 billion in 3Q 7, bringing year-to-date profits to a total of $5.1 billion, nearly 6% below that in the same year-earlier period. 2 $ billions 4 35 Pre-Tax Profits: NYSE-Reporting Firms 8 Quarterly First three quarters of 26 and Source: SIFMA DataBank According to SIFMA s DataBank which dates back to 198. Please note that the results described in this report represent only a portion of overall securities industry results. Many financial institutions, especially those reporting to the NYSE, have significant business lines conducted outside of their U.S. broker-dealers. In addition, NASD-reporting firms results are still pending. We expect to be able to report on those results shortly. SIFMA Research Reports, Vol. II, No. 12 (December 28, 27)

4 Gross revenues in 3Q 7 of $78.8 billion were 17.3 percent below those in 2Q 7 and 3.6 percent lower than in 3Q 6. More dramatic declines occurred in net revenues (total revenues minus interest expense) which totaled $2.1 billion in the third quarter, lower by 42.1 percent and 33.6 percent from levels in 2Q 7 and 3Q 6, respectively. While there were a few bright spots in the third quarter for NYSE-reporting firms, the two major factors driving gross revenues lower were substantial trading losses and significantly lower underwriting revenues. Trading losses reached a record high $6.1 billion in 3Q 7, of which over half can be attributed to losses from debt trading, as liquidity became a major issue in the capital markets. Underwriting revenue also decreased significantly, reaching only $4.6 billion during the third quarter, 3.7 percent lower than in the second quarter although still 9.8 percent higher than in the third quarter of 26. $ billions 4 NYSE-Reporting Firms Quarterly Domestic Net Revenues* Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 *Net of interest expense Source: SIFMA DataBank Reflecting trading volume 3 growth, which increased 9.5 percent in 3Q 7 compared to 2Q 7 and 24.9 percent compared to 3Q 6, commission and fee income rose 3. percent and 18.6 percent over the same respective periods. Fund management operations also remained positive in the third quarter. Mutual fund sales revenues reached $2. billion in 3Q 7, up 3. percent from 2Q 7 and 8.1 percent than in the same year-earlier period. This reflects mutual fund net cash inflows despite volatility in the equity and fixed-income markets during the third quarter. Asset management fees of $5.5 billion in 3Q 7 were marginally higher than the $5.4 billion in previous quarter, as the value of mutual fund assets under management increased to $11.9 trillion at the end of the third quarter, up 4.7 percent from the pervious quarter. Margin interest revenue of $8.1 billion in the third quarter was a quarterly record high for NYSEreporting firms and an increase of 12.1 percent over 2Q 7 and 48.4 percent above 3Q 6. 3 Average daily trading volume on the AMEX, NASDAQ and NYSE, combined. SIFMA Research Reports, Vol. II, No. 12 (December 28, 27) 5

5 Other revenue related to the securities business, which includes business lines such as prime brokerage, derivative and structured products, and corporate financial advisory work, decreased to $48.8 billion in 3Q 7, down slightly from the $5.4 billion earned in 2Q 7 but 11. percent higher than in 3Q 6. On the other side of the ledger, total expenses for NYSE-reporting firms decreased 9.2 percent in 3Q 7 to $82.6 billion, down from the $91. billion in 2Q 7 but 6.3 percent above that in the same year-earlier period. Total compensation also declined significantly to $13.2 billion in 3Q 7, the lowest level since 3Q 4, 32.4 percent below the previous quarter and 17.9 percent lower than in the same year-earlier period. Through the first three quarters of 27, compensation totaled $52.8 billion, 1.3 percent below that in the same 26 period. Interest expense, the largest single expense item, totaled $58.7 billion in 3Q 7, down 3.1 percent from 2Q 7 but 13.9 percent above 3Q 6. Marcelo Vieira Vice President, Industry Research mvieira@sifma.org 6 SIFMA Research Reports, Vol. II, No. 12 (December 28, 27)

6 Source: SIFMA DataBank SIFMA Research Reports, Vol. II, No. 12 (December 28, 27) 7

7 MIDDLE MARKET REPORT The Securities Industry and Financial Markets Association s quarterly Middle Market Report analyzes and presents aggregate information and trends related to bond and equity underwriting in which one or more middle market securities firms - non-primary dealers - are the lead underwriter or book runner on the deal based on publicly available information 1. The report s bond coverage focuses on long-term transactions, those in which the stated original maturity at issuance is greater than thirteen months, and covers the range of fixed-income market sectors including municipal bonds, corporate bonds, federal agency securities and assetbacked and private-label mortgage-backed securities underwritten by middle market securities firms. In addition, the report analyzes and presents middle market firm-led equity underwriting and mergers and acquisition (M&A) advisory activity. Middle Market Firm-Led Issuance Year-to-Date Ahead of Last Year; Third Quarter Issuance Declines Middle market firm-managed issuance in the municipal, corporate, federal agency and structured finance market sectors increased to $332.3 billion in the first three quarters of 27, 1.7 percent above the $3.2 billion a year ago 2. Third-quarter issuance was $83.3 billion compared to $128.3 billion in the second quarter and $14.5 billion in the third quarter a year ago. Issuance in all sectors except for corporate bonds increased year-to-date compared to the same period last year. Third-quarter middle market firm-led issuance was lower on a linked-quarter basis in all sectors as a result of credit risk repricing, reduced liquidity and the effect of weakness in the mortgage market, especially subprime. Subject to consumer spending vulnerabilities, economic growth will likely continue at a belowtrend rate. Global consumption, employment and income gains are compensating for weakness in the housing market, which is expected to continue into the next year. Notwithstanding the subdued economic outlook and still-fragile credit market conditions, investors are in some cases making distinctions between mortgage assets, where credit has deteriorated substantially, and other asset classes, which continue to exhibit stronger underlying fundamentals. However, liquidity conditions across the board are reduced substantially from one year ago and will affect middle market firm-led underwriting volumes over the next few quarters Firms covered in the report as middle market rather than regional to reflect the fact that these firms generally operate and underwrite deals in more than one region of the country. Despite the change in terminology, the types of firms covered in the report have not changed from the previous issues of the publication series. Also, please note that the report title has been changed to Middle Market Report from Middle Market Bond Dealer Report, as the report now covers equity underwriting and M&A advisory activity in addition to bond underwriting. Middle market issuance volume changes periodically due to changes in the list of primary dealers. SIFMA Research Reports, Vol. II, No. 12 (December 28, 27)

8 Middle Market Firm-Led Municipal Issuance Volume Rises Year-to-Date, Lower for the Third Quarter Middle market firm-led municipal issuance volume increased to $11. billion in the first three quarters of 27, 13.7 percent higher than in the first three quarters of 26. Issuance decreased to $28.6 billion in the third quarter, a 24.7 percent decline from the $38. billion issued in the second quarter and 13.7 percent lower than the third quarter a year ago. Nearly 55 percent of middle market-firm led issuance volume had the highest Moody s rating, Aaa, with 17.2 percent by volume rated Aa or below and 28. percent unrated. Credit enhancement provided support for 69.3 percent of total issuance by dollar volume. Despite the taxable credit market turmoil in the third quarter, credit quality conditions in the municipal market remained relatively stable, based on growing state and local government tax receipts. Local and state government revenue streams, however, are likely to be adversely affected by continued housing and construction industry weakness and the trend of lower housing prices. Questions about the standing of certain monoline bond insurers could also affect municipal liquidity and valuations, and have been a contributing factor in the relative municipal price weakness over the last month. There may be a transition to less reliance on bond insurance. Both competitive and negotiated municipal underwriting volumes were higher in the first nine months of the year. Middle market firm-led negotiated issuance increased 14.4 percent to $84.4 billion, up from $73.8 billion in the first three quarters of 26. Year-over-year, competitive underwriting volume also increased in the first three quarters, reaching $15. billion, up 12.8 percent from $13.3 billion in the same period in 26. The Midwest ranked first among geographic regions, accounting for 24.9 percent of middle market firm-led municipal underwriting volume, with the Southwest ranking second and the Southeast ranking third. The top issuing states were Texas and California, accounting for a combined 22.8 percent of middle market firm-led municipal underwriting through the first nine months. Education continues to be the largest sector based on use-of-proceeds, accounting for 39.8 percent of middle market firm-led municipal volume in the first three quarters of the year. Corporate Bond Underwriting Slows as Market Conditions Tighten Middle market firm-led corporate bond issuance volume declined 19.3 percent to $37.3 billion through the first three quarters of the year, down from $46.2 billion during the same period a year ago, with the pace of corporate issuance slowing during the course of the year. Thirdquarter volume totaled $8.1 billion, 32.5 percent lower than the $12.3 billion during same period a year ago and 2.4 percent less than the $8.3 billion in the second quarter. U.S.-based corporations accounted for 81. percent of middle market-led corporate issuance in the first three quarters of the year. North Carolina-based corporations continued to rank first by a wide margin with 54.8 percent of issuance volume during the first nine months, followed by New York-based corporations at 11.1 percent market share. The financial services industry, including commercial banks, credit institutions, and mortgage securities, remained the dominant middle market-led issuance sector in 27, accounting for 82.6 percent of total issuance. SIFMA Research Reports, Vol. II, No. 12 (December 28, 27) 9

9 Securitized Underwriting, Agency Issuance Increase Year-to-Date, Lower in the Third Quarter Middle market firm-led underwriting of securitized debt increased to $75.1 billion in the first three quarters of 27, up 11.3 percent from $67.5 billion during the same period a year ago. Securitized issuance dried up in the third quarter, falling to $4.5 billion, down from $34.1 billion in the second quarter and $29.1 billion in the third quarter a year ago. The drop in issuance volume is attributable to the continued weakness in the housing market, depressed mortgage market conditions, especially subprime, and reduced credit market liquidity. Middle market firm-led residential mortgage-backed securities (RMBS) underwriting totaled $32.9 billion in the first three quarters of the year, more than 4 percent of all middle market firm-led securitized underwriting. Federal agency issuance led by middle market firms rose to $28.5 billion in the first nine months of the year, up 26.1 percent from the $22.6 billion issued over the same period a year ago. On a linked-quarter basis, issuance declined to $8.7 billion in the third quarter, down 23.7 percent from the $11.4 billion in the second quarter but up slightly from the $8.5 billion in the third quarter a year ago. Equity Underwriting and M&A Volume Higher in Q3 Equity underwriting led by middle market firms totaled $9.3 billion through the first nine months of 27, up 2.2 percent from $75.1 billion in the same year-earlier period. On a linkedquarter basis, third-quarter volume decreased 8.5 percent from the second quarter but increased 5.2 percent from a year ago. Equity underwriting represented 37.3 percent of total (debt and equity) middle market firm-led underwriting volume compared to 3.1 percent a year ago. Middle market firm-advised mergers and acquisitions (M&A) accounted for $547.7 billion, or 39.1 percent, of total U.S. M&A dollar volume in the first nine months of 27, nearly 5 percent more than the $371.4 billion in the first nine months of 26 when the middle-market share was 37.1 percent. Over the last several years, corporate acquisition volumes have been supported by strong profit growth, appreciating equity prices and access to low-cost debt financing. In light of the more restrictive credit market environment, the reduced availability of debt financing is likely to constrain leveraged buy-out deal-making, which has driven much of the acquisition growth in recent years. Strategic corporate M&A financed by either cash or stock will depend more on internal profit and cash flow growth and stock market trends going forward. Bryan Gross Director, Research bgross@sifma.org The Middle Market Report is based on new issue data provided by Thomson Financial, part of the Thomson Corporation ( and a leading provider of information and technology solutions to the financial industry. 1 SIFMA Research Reports, Vol. II, No. 12 (December 28, 27)

10 M-1 MIDDLE MARKET REPORT Municipal 27:Q3 LONG-TERM MUNICIPAL ISSUANCE BY GEOGRAPHIC REGION # % of # % of # % of $ Bil Issues Tot. Vol.* $ Bil Issues Tot. Vol.* $ Bil Issues Tot. Vol.* Southeast 21, % Southwest 24, , % Mid West 25, , % Florida 5, % Texas 12, % Illinois 6, % Georgia 3, % Colorado 2, % Ohio 3, % Louisiana 2, % Arizona 2, % Indiana 2, % Alabama 2, % Kansas 1, % Missouri 2, % Virginia 1, % Arkansas 1, % Michigan 2, % North Carolina 1, % New Mexico 1, % Minnesota 2, % Tennessee 1, % Oklahoma % Wisconsin 1, % Kentucky 1, % Utah % Iowa 1, % South Carolina % Nebraska 1, % Mississippi % South Dakota % West Virginia % North Dakota % Puerto Rico % # % of # % of $ Bil Issues Tot. Vol.* $ Bil Issues Tot. Vol.* Far West 14, % Northeast 15, ,9 15.2% California 1, % Pennsylvania 5, % Washington 1, % New York 4, % Oregon 1, % New Jersey 1, % Alaska % Massachusetts 1, % Nevada % Connecticut % Montana % Maryland % Idaho % Delaware % Hawaii % Maine % Wyoming % Rhode Island % D. of Columbia % New Hampshire % Vermont % Total: $11,7.4 Million Total Number of Issues 7,44 * Middle market percentages represent the portion of total U.S. middle market dealers accounted for by that region. State percentages represent the portion of total issuance in the region. M-2 27:Q3 LONG-TERM MUNICIPAL TOP 25 ISSUERS $ Mil # Issues $ Mil # Issues 1 NYC Municipal Water Finance Auth Gwinnett Co (Gwinnett) SD Chicago City-Illinois South Texas Higher Educ Auth Illinois Finance Authority NYS Dorm Authority California Statewide Comm Dev Au NYC Transitional Finance Auth New Mexico Mortgage Fin Auth Washington State Hsg Fin Comm Assoc of Bay Area Govt (ABAG) Missouri Housing Dev Commission Aurora City-Illinois California Housing Finance Agcy Houston City-Texas Connecticut Hlth & Ed Facs Auth Louisiana Public Facilities Auth Philadelphia City-Pennsylvania Bexar Co (North East) ISD Birmingham Wtrwks & Swr Board Miami-Dade Co-Florida Highlands Co Health Facs Auth Illinois North Carolina St Ed Assist Auth Total Top 25 12, Massachusetts Dev Finance Agcy Industry Total 11,7.4 7,44 SIFMA Research Reports, Vol. II, No. 12 (December 28, 27) 11

11 MIDDLE MARKET REPORT Municipal M-3 M-4 Volume 14, Long-Term Municipal Issuance Avg. Size 16 Volume 45, 27* Long-Term Municipal Issuance by Use of Proceeds 12, 1, , 35, 3, 8, 6, , 2, 15, 4, 4 1, 2, 2 5, * Volume Avg. Size * As of September 3, 27 Education Genl Purpose Utilities So urce: Tho mson Financial * As of September 3, 27 Healthcare Housing Public Facilities Transportation Development Electric Power Env Facilities M-5 M-6 Volume 9, Long-Term Municipal Issuance General Obligation & Revenue 27* Long-Term Municipal Issuance Credit Enhancement 8, 7, Bond Insurance 51% 6, 5, 4, 3, 2, 1, Revenue 23 G.O * * As of September 3, 27 Not Enhanced 36% Total: $11,7.4 M illion Other1 6% LOC Domestic Bank 7% Includes M ortgage Backed, St andby Purchase Agreement, Let ter of Credit, Guarant eed Invest ment Contract, and Guaranteed * As of September 3, 27 M-7 M-8 27* Long-Term Municipal Issuance Bid Type 27* Long-Term Municipal Issuance Credit Rating Competitive 15% Private placement 2% Not Rated 28% Aaa 55% Negotiated 83% Other 17% Total: $11,7.4 M illion * As of September 3, 27 Total: $11,7.4 M illion * As of September 3, SIFMA Research Reports, Vol. II, No. 12 (December 28, 27)

12 MIDDLE MARKET REPORT Corporate C-1 C-2 Long-Term Corporate Issuance Volume Avg. 45, 5 Volume 45, Corporate Issuance Investment-Grade & High-Yield 4, 45 4, 35, 4 35, 3, 35 3, 25, 2, 15, 1, 5, * Volume Avg. Size , 2, 15, 1, 5, * Investment-Grade High-Yield * As of September 3, 27 * As of September 3, 27 C-3 C-4 Corporate Issuance Breakdown by Industry 27* Volume 18, Corporate Issuance Credity Rating 27* Number of Deals 16 Manufacturing 4% Insurance 7% Credit Institution 4% Real Estate 3% Other 5% Other Finance 2% M ortgage Securities Finance 2% Personal & Business Service 1% 16, 14, 12, 1, 8, 6, , 4 2, 2 Total: $37,293. M illion Commercial Bank 72% AA A+ A A- BBB+ Volume BBB BB+ BB Number of Deals AA- BB- B B- CCC+ * As of September 3, 27 * As of September 3, 27 C-5 ISSUANCE BY STATE 27:Q3 State $ Mil # Issues State $ Mil # Issues 1 North Carolina 2, Illinois Foreign 7, D. of Columbia New York 4, Nevada Georgia 1, Pennsylvania Texas Maine Alabama New Hampshire Delaware Missouri Ohio Virginia Massachusetts California Washington Total Top 25 37, Connecticut Industry Total 37, SIFMA Research Reports, Vol. II, No. 12 (December 28, 27) 13

13 MIDDLE MARKET REPORT U.S. Agency A-1 A-2 Volume U.S. Agency 1 Issuance Volume Avg. Deal Size US Agency Issuer Ranking 27* 7, 6, 5, Federal Home Loan Banks 73% 4, 3, , 1 1, * Total: $28,55.6 Million Freddie Mac 14% Fannie Mae 13% Volume Average Deal Size 1 Includes FHLB, FNMA, FHLMC * As of September 3, 27 * As of September 3, 27 MIDDLE MARKET REPORT Securitized Markets S-1 S-2 Volume 1, Securitized 1 Issuance Volume Avg. Deal Size 1 Securitized 1 Asset Type 27* 9, 8, 7, Commercial Mtg 23% Alt-A Mortgages 13% 6, 6 5, 4, 5 4 3, 2, 1, * 1 Includes ABS and Private Label MBS * As of September 3, 27 Volume Average Deal Size Residential Mtg 44% Total: $75,117.1 Million Credit Card Recs 1% Other 4% Student Loans 1 Includes ABS and Private Label MBS 1% * As of September 3, 27 Auto Loans/Recs 6% HEL 8% 14 SIFMA Research Reports, Vol. II, No. 12 (December 28, 27)

14 MIDDLE MARKET REPORT Equity Markets E-1 E-2 % 6 Equity Underwriting - Percentage of Total US Dollar Volume % 7 Equity Underwriting - Percentage of Total Number of US Deals % of Total US Dollar Volume % of Total US Deals * * * As of September 3, 27 * As of Septmber 3, 27 E-3 E-4 % 6 M&A Announced Deals - Percentage of Total US Dollar Volume % 1 M&A Announced Deals - Percentage of Total Number of US Deal Volume 5 8 % of Total US Deals % of Total US Deals * * * As of September 3, 27 * As of September 3, 27 SIFMA Research Reports, Vol. II, No. 12 (December 28, 27) 15

15 Securities Industry Employment Update Summary The Bureau of Labor Statistics (BLS) estimated that national securities industry employment decreased in September by.1 percent, losing 1, jobs from August s level. Securities industry headcount in New York State and New York City also declined in September, down.6 percent and 1.5 percent, or 1,2 and 3, jobs, respectively. For the third quarter, national securities industry employment increased from the previous quarter by 3,2 jobs, or by.4 percent. Securities industry employment in New York State and New York City increased in the third quarter compared to the second quarter by 2.1 percent and 1.5 percent, or 4,4 and 2,8 jobs, respectively. U.S. Employment After the national securities industry reached its 27 employment high of 849,6 jobs in August, employment levels retraced to 848,6 jobs in September. The September headcount was 3.3 percent above that in the same year-earlier period. Securities industry employment has gradually trended upward during the 31 months since the end of the last cyclical employment downturn, when the industry lost 89,9 jobs, or 1.7 percent of its total workforce. From the October 23 nadir of 751, jobs through September 27, the securities industry gained 97,6 jobs. This represents a full recovery of the jobs lost between the peak of 84,9 in March 21 and the trough of October 23, and an additional gain of 7,7 jobs above that previous record. Turmoil in the US subprime mortgage market has affected many markets and financial firms, both in the US and overseas. Fallout has already led to layoffs domestically and is expected to continue to take a toll on securities industry employment in 28. Thousands 86 Monthly US Securities Industry Employment * *September Preliminary Source: Bureau of Labor Statistics (BLS), US Department of Labor (DOL) 16 SIFMA Research Reports, Vol. II, No. 12 (December 28, 27)

16 National Securities Industry Employment 1-Month Net Change (Thousands) Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: BLS The September 27 securities industry national headcount of 848,6 was.9 percent above its previous peak level of 84,9 set in March 21. Thousands Annual US Securities Industry Employment * *September Preliminary Source: BLS (Year-end data) SIFMA Research Reports, Vol. II, No. 12 (December 28, 27) 17

17 New York State Employment BLS estimated that the securities industry headcount in New York State decreased by.6 percent, or 1,2 jobs, in September, bringing the number of securities industry positions to 214, from August s level of 215,2. For the third quarter, New York State securities industry employment increased from the previous quarter by 4,4 jobs, or 2.1 percent, and was 6. percent above the third quarter 26. Thousands New York State Monthly Securities Industry Employment * *September Preliminary Source: BLS For the year to date, the securities industry added 1,3 jobs in New York State, increasing its headcount by 5.1 percent. During the same year-earlier period New York State added 7,7 jobs, an increase of 4 percent. The subprime mortgage market crisis is expected to have a greater fiscal effect on New York State than New York City because the State is more dependent on revenues related to the securities industry Di Napoli, Thomas P., and Kenneth B. Bleiwas, The Securities Industry in New York City, Report 5-28, Office of the State Comptroller, October 27, p. 2. SIFMA Research Reports, Vol. II, No. 12 (December 28, 27)

18 New York State Securities Industry Employment 1-Month Net Change (Thousands) Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: BLS The September 27 securities industry headcount of 214, jobs in New York State was 1.2 percent below the monthly peak of 216,7 reached in December 2. The 28-month job recession that followed the 2 peak reduced the industry s headcount by 19.5 percent, or 42,2 jobs, before ending in April 23 at an employment level of 174,5. By the end of September 27, New York State added 39,5 industry jobs since the April 23 low point, regaining 93.6 percent of the jobs lost during the industry s recession. Thousands 25 New York State Annual Securities Industry Employment * *September Preliminary Source: BLS (Year-end data) SIFMA Research Reports, Vol. II, No. 12 (December 28, 27) 19

19 Percent New York State's Share of US Securities Industry Jobs * *September Preliminary Source: BLS (Year-end data After decades of decline, New York State s share of the national securities industry s workforce has been increasing since 21. The latest available BLS figures show that in September, New York State accounted for 25.2 percent of national securities industry jobs, an increase from 26 year-end (24.6 percent). However, the 41,3 new securities industry jobs created in the state since the 1987 stock market crash is equivalent to only 11.8 percent of the 351, security industry jobs created in the other 49 states combined. Thousands Securities Industry Employment Change (1987 to 27*) New York State Other States *September Preliminary Source: BLS 2 SIFMA Research Reports, Vol. II, No. 12 (December 28, 27)

20 New York City Employment According to BLS data, New York City s securities industry employment decreased by 1.5 percent in September from August s level. The securities industry s headcount in New York City was 191,8 at end-september, a decline of 3, jobs compared to the prior month s level. For the third quarter, New York City securities industry employment increased from the previous quarter by 2,8 jobs, or 1.5 percent, and was 5.6 percent above the third quarter 26 level. Year-to-date, the securities industry added 8,6 jobs in New York City compared to the addition of 7,7 jobs during the same year-earlier period. Ten years ago, New York City accounted for 26.7 percent of nationwide securities jobs compared with 22.6 percent at end-september. As of end-september, New York City regained 32,8 jobs, or 79.4 percent of the 41,3 jobs lost between the peak of 2,3 in December 2 and the trough of 159, in April 23. The jobs gained over the past 53 months represent a 2.6 percent increase of New York City securities industry employment. Industry employment in New York City has been trending upward, although it remains 4.2 percent below its peak level. Thousands 21 New York City Monthly Securities Industry Employment * *September Preliminary Source: BLS SIFMA Research Reports, Vol. II, No. 12 (December 28, 27) 21

21 New York City Securities Industry Employment 1-Month Net Change (Thousands) Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: BLS Thousands New York City Annual Securities Industry Employment * *September Preliminary Source: BLS (Year-end data) Paul Rainy Research Analyst prainy@sifma.org 22 SIFMA Research Reports, Vol. II, No. 12 (December 28, 27)

22 SIFMA Research Reports, Vol. II, No. 12 (December 28, 27) 23

23 SIFMA RESEARCH AND POLICY DEPARTMENT Michael Decker Senior Managing Director, Research and Public Policy Washington Staff Switchboard: Steven Davidson, CFA: Marcelo Vieira: Tiffany Coln: Bryan Gross: Mary Bateman: New York Staff Switchboard: Kyle Brandon: Charles Bartlett: Paul Rainy: Surveys Bernard Reichert: Nancy Cosentino: Prepared by SIFMA Research Department Copyright 27 Securities Industry and Financial Markets Association